The opportunity cost of an asset:
A) should be depreciated annually.
B) can differ depending on market conditions.
C) is typically ignored in capital budgeting.
D)is important only for parcels of land.

Question

Quizplus · Accepted Answer

The opportunity cost of an asset can differ depending on market conditions, as it relates to the potential earnings or benefits that could have been gained from pursuing alternative investment options. It is important to consider opportunity costs in capital budgeting decisions to ensure that the best possible investment option is chosen. Depreciation and land parcels are not directly related to opportunity cost.

The Opportunity Cost of an Asset